Quick-commerce firms push deeper into smaller cities as metro growth slows

Amazon and Flipkart are expanding dark-store networks beyond major urban markets as competition and saturation pressure profitability in metros

India’s quick-commerce sector, long fueled by rapid expansion, is entering a more complex phase as saturation in metro markets begins to pressure profitability. With more than 6,000 dark stores and rising competition in urban areas, companies are increasingly turning to smaller cities for growth, with players such as Amazon Now and Flipkart Minutes expanding beyond metros into tier-1 and tier-2 markets.

 

Competition among quick-commerce companies has intensified as platforms chase an increasingly overlapping customer base, raising concerns about diminishing returns even as they expand into smaller cities. Bernstein, the US-based research firm, in a report said metro markets now reflect a largely mature quick-commerce footprint, while tier-1 and tier-2 cities continue to offer room for expansion due to lower store density and thinner pincode coverage.

 

“While Metros now reflect a largely mature quick commerce footprint, Tier-1 and Tier-2 cities continue to offer some headroom for expansion,” the Bernstein report said. “The current dark store presence in many Tier-1 and Tier-2 clusters is only in the early innings of build out, with large pockets of demand yet to be formally serviced.”

 

E-commerce companies have already started scaling up quick-commerce operations in these locations. Amazon said it will expand its ultra-fast delivery service, Amazon Now, to 100 cities across India, as it steps up investments in rapid-commerce logistics and fulfillment infrastructure. The company plans to scale the service through more than 1,000 micro-fulfillment centers as it expands beyond metros into smaller cities. Amazon Now, which offers delivery within minutes, will be rolled out in cities including Pune, Hyderabad, Chennai, Kolkata, Jaipur, Lucknow and Ahmedabad, among others, in addition to existing operations in Mumbai, Delhi-NCR and Bengaluru.

 

The service provides a curated assortment of daily essentials, including groceries, personal-care items, beauty and fashion products, small appliances, baby products, pet supplies and healthcare supplements.

 

“Customers continue to enjoy Amazon Now, appreciating our delivery speed, value and selection — especially the quality of fresh produce sourced directly from farmers,” said Harsh Goyal, vice president, everyday essentials, Amazon India. “Encouraged by this success, we have further accelerated our expansion plans and will scale Amazon Now to 100 cities, fueled by a network of more than 1,000 micro-fulfillment centers.”

 

Amazon Now’s rapid expansion is part of Amazon’s broader  Rs 2,800 crore investment to strengthen its operations network and improve associate safety, health and financial well-being. Amazon Now is gaining traction in India, with orders rising about 25 per cent month-over-month, chief executive Andy Jassy said recently on the company’s latest earnings call, as the ecommerce firm accelerates its push into the country’s fast-growing rapid-delivery market.

 

Flipkart is targeting more than 1,500 quick-commerce dark stores by 2026, while Amazon India has expanded its network to roughly 450–500 locations, according to a UBS report. Flipkart, which currently operates about 750–850 dark stores, has been expanding aggressively in Tier-2 and -3 cities since beginning its rollout in January 2026. The company plans to add another 800 stores by the end of this year.

 

John Furner, president and chief executive officer (CEO), Walmart Inc, during his visit to India said that the US retailer remains bullish on India’s fast-growing quick-commerce market, as the model gains traction globally and Walmart’s own businesses in China and the US accelerate investments in rapid delivery.

 

The rapid expansion by Flipkart Minutes and Amazon India is increasingly being driven by third-party operators that manage dark-store setup and operations, allowing platforms to scale faster without building the full infrastructure in-house. The shift has created tailwinds for specialised enablers as both companies expand aggressively across smaller cities. Flipkart Minutes has recently entered Tier-2 and -3 markets including Rohtak, Muzaffarpur, Asansol, Durgapur, and Panchkula.

 

The UBS report also said Amazon India plans to wind down its 4–24 hour delivery service, Amazon Fresh, across 10–15 major Indian cities as it shifts focus to its quick-commerce offering, Amazon Now. Flipkart is also preparing to spin off its quick-commerce service, Flipkart Minutes, into a standalone app ahead of its Big Billion Days sale, according to people familiar with the matter.

 

The Bernstein report said the sector has scaled quickly, with more than 5,700-6,000 dark stores operated by leading players including Blinkit, Instamart, Zepto, Flipkart and Amazon as of April 2026, serving roughly 2,600 pincodes and about 230 million people, or around 17 per cent of India’s population.

 

The report also noted that dark-store consolidation may be necessary to improve profitability in metro markets. One approach, adopted by Blinkit and Swiggy, is to push higher average order values through non-grocery categories to drive better margins. Beyond metros, the next phase of growth lies in Tier-1 and -2 cities, though this expansion remains uncertain. While these markets offer headroom, they present structural challenges including lower population density, awareness, and spending power.

 

“Tier-1 to Tier-3 potential is still unproven,” said the Bernstein report. “We estimate 50 per cent of store potential there has also been met… key aspects like customer adoption curve, addressable wallet share and supply chain economics are still works in progress.”

 

Bernstein said investments in distribution networks in Tier-1 and smaller cities may be front-ended, with a slower ramp-up than in metros. It added that quick commerce had already become “a way of life in top 4 cities", even as store saturation threatens profitability.